Vodafone and Idea Cellular join to create India's largest telco

British carrier Vodafone as announced a $23bn agreement to merge with local operator Idea Cellular, making a major play for the country's 1.2 billion consumers.

Wong Yu Liang

The deal, announced on Monday, will create one of the largest cellphone carrier in the world, with approximately 400 million subscribers and a customer market share of approximately 35 per cent. Analysts believe that the deal, which has been in the works for several months, was catalysed by the arrival of new competitor Reliance Jio in the Indian market and an ensuing price war between local operators. The uptake of cellphone use in India has gathered pace in recent years, and competition is fierce to pick up the waves of new potential customers. The Vodafone-Idea tie-up, however, marks a major play, as it will create the country’s largest telco by revenue.

Details still murky

Many of the finer details of the proposed merger – including the new company’s name and its leadership structure – have not yet been publicly announced. However, it is known that Vodafone will own 45.1 per cent of the new company after transferring a 4.9 per cent stake in cash at closing to Idea parent company Aditya Birla Group, which will then hold a 26 per cent stake. The duo will equalise their holdings in the company within five years. The deal is subject to regulators and is expected to close in 2018.